- Associated Press - Friday, July 8, 2011

LONDON (AP) - Prime Minister David Cameron’s former communications chief and an ex-royal reporter were arrested Friday in a phone hacking and police corruption scandal that has already toppled a major tabloid and rattled the cozy relationship between British politicians and the powerful Murdoch media empire.

The 168-year-old muckraking tabloid News of the World was shut down Thursday after being engulfed by allegations its journalists paid police for information and hacked into the phone messages of celebrities, young murder victims and even the grieving families of dead soldiers. Its last publication day is Sunday.

The hacking revelations horrified the nation and advertisers, who pulled their ads en masse. News International, the British arm of Rupert Murdoch’s News Corp., jettisoned the paper in hopes of saving its $19 billion (12 billion pound) deal to take over satellite broadcaster British Sky Broadcasting. But the British government on Friday signaled the deal would be delayed due to the crisis.

In what could be an emergency damage-control move, Rupert Murdoch was flying in to London, according to the Financial Times. News International declined comment on the report.


Many expressed astonishment that 43-year-old Rebekah Brooks, who was editor of News of the World when some of the hacking allegedly occurred, was keeping her job while the paper’s 200 staff were laid off.

The Murdoch group has shown, “an almost maniacal desire to protect Ms. Brooks at all costs,” said industry analyst Claire Enders.

Brooks told the paper’s soon-to-be-laid-off staff Friday that she was staying on as chief executive of News International, adding that the paper was “working hard to put our own house in order and do the right thing.”

Brooks appeared to hint at revelations to come, telling the journalists that “in a year’s time it’ll become apparent why we did this,” according to a leaked audiotape of the meeting obtained by Sky news.

“Eventually it will come out why things went wrong,” she said, noting that that would also be a very bad moment for the company.

Saying “this is not exactly the best time in my life,” Brooks pledged to “get vindication” for the paper and its staff.

“If you think this is a bundle of laughs trying to get his company’s reputation back, it isn’t,” she said, adding that she believed she would be “much more useful leading the company through” the firestorm.

However, News International announced after the meeting that Brooks had been removed from the paper’s internal inquiry into the wrongdoing. Instead, the paper’s standards committee will report to Joel Klein, a former New York City schools chancellor who now heads News Corp.’s education division.

The police investigation into the phone hacking drew uncomfortably close to the prime minister Friday with the arrest of Andy Coulson, Cameron’s once-powerful communications chief and a former editor of News of the World.

Coulson, 43, was taken into custody Friday morning on suspicion of corruption and “conspiring to intercept communications.” Hours later, he was released on bail until October. He refused to answer questions from reporters as he left a police station.

Police also arrested Clive Goodman, the former News of the World journalist who served a jail term in 2007 for hacking into the phones of royal aides. This time the arrest was on suspicion of making illegal payoffs to police for scoops. He was also later released on bail.

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